Urea at the New Orleans import hub jumped from $516 to $683 per metric ton in a single week, a rise of 32 percent. The trigger was the closure of the Strait of Hormuz, and analysts at the Atlantic Council say fertilizer is only one of the places where the damage will spread.
Joseph Webster, a senior fellow at the council’s Global Energy Center, and Kate Burnett, a young global professional at the same centre, laid out the case in a March 2026 analysis. Their warning: if the closure drags on for a few more months, it could become the biggest and most consequential energy and supply chain disruption in modern history, and all but guarantee a period of stagflation worldwide.
Plastics start with oil and gas
The Middle East normally supplies about 30 percent of seaborne liquefied petroleum gas exports, a fuel that can feed petrochemical plants. Anshika Prajapati, an analyst at Drewry, estimates that a prolonged closure would remove 24 percent of seaborne naphtha, another key input. Those cargoes are now largely cut off.
East Asia has its own problem. Petrochemical plants in South Korea, Taiwan and Japan use huge amounts of electricity, and the grids there lean on LNG, a market that has tightened sharply. If power has to be rationed, the authors expect governments to favour air conditioning and chipmaking, including memory for artificial intelligence, over plastics. South Korean producers are already cutting run rates by up to 50 percent. Japan gets about 42 percent of its naphtha from the Middle East.
China looks better placed. Its petrochemical firms have plenty of electricity, and Russia, a partner, supplies much of the naphtha that other Asian buyers are scrambling for. On PVC, China has gone from net importer to net exporter and accounts for 78 percent of global incremental capacity additions. Most Chinese producers use a coal-based process that needs no imported oil or naphtha. The analysts argue that Beijing could end up with another lever over global supply chains.
American shale-based producers are insulated from the disruption and will probably gain market share if prices spike. Consumers are another matter. The average US resident used 255 kilograms of new plastics in 2019, against a world average of 60.1 kilograms, so a price surge would land harder there.
Fertilizer and food
The closure has also halted shipments equal to roughly 30 percent of globally traded ammonia-based nitrogen fertilizer, just ahead of planting season. The United States makes a lot of fertilizer but has relied on imports for roughly half of its urea use. Most American ammonia does not pass through Hormuz, yet tighter global supply pushes up prices everywhere.
Farmers will pass higher costs down the chain. Some may plant less corn and other nitrogen-hungry crops, which could raise feed costs and, in turn, meat and dairy prices.
China, the second-largest fertilizer exporter, is limiting foreign sales for now to protect its own farmers. Russia, the largest exporter, and Belarus, a major potash producer, are positioned to fill the gap. China relies on domestic coal for ammonia, so Hormuz does not constrain its output directly.
Waves of price increases
The authors describe a sequence. Jet fuel comes first, because storage is low; fares are already climbing, especially in Asia. Diesel and gasoline follow. Then comes the farm wave, as pricier ammonia, fertilizer and diesel lead to smaller plantings and lower yields.
A later wave may be quieter and more damaging. Food packaging, medical supplies and clothing all depend on petrochemicals. If China imposed export controls on petrochemical products, as it does with critical minerals, US inflation would likely run higher still. The analysts add that if the Federal Reserve lost its hard-won credibility on prices, inflation expectations and real interest rates could rise.
“Every day the war continues gives them more cards to play,” the authors wrote of China and Russia.
